Thursday , 28 March 2024

Coming Currency Superstorm Will Be Absolutely Catastrophic for U.S. Economy (+5K Views)

What would happen if someday the rest of the world decides to reject the U.S. dollar…and a tsunami of U.S. dollars come flooding back to this country? Just think of the worst super storm that you can possibly imagine, and then replace every drop of rain with a dollar bill.  The giant currency superstorm that will eventually hit this nation will be far worse than that.

So says Michael, The Patriot Blogger, (http://theeconomiccollapseblog.com) in edited excerpts from the original article(1) entitled The Giant Currency Superstorm That Is Coming To The Shores Of America When The Dollar Dies.

 Lorimer Wilson, editor of www.munKNEE.com (Your Key to Making Money!), may have edited the article below to some degree for length and clarity – see Editor’s Note at the bottom of the page for details. This paragraph must be included in any article re-posting to avoid copyright infringement.

The article goes on to say, in part:

Right now, we export a lot of our inflation.  Each year, we buy far more from the rest of the world than they buy from us, and so the rest of the world ends up with giant piles of U.S. dollars.  This works out pretty well for them, because the U.S. dollar is the primary reserve currency of the world and is used in international trade far more than any other currency is.

Back in 1999, the percentage of foreign exchange reserves in U.S. dollars peaked at 71%, and since then it has slid back to 62.2%, albeit still an overwhelming amount.  We can print, borrow and spend like crazy because the rest of the world is there to soak up our excess dollars because they need them to trade with one another.  [Furthermore, it should be noted] that there are far more dollars in use in the rest of the world than in the United States itself.  The following is from a scholarly article(2) by Linda Goldberg…

The dollar is a major form of cash currency around the world. The majority of dollar banknotes are estimated to be held outside the US. More than 70% of hundred-dollar notes and nearly 60% of twenty- and fifty-dollar notes are held abroad, while two-thirds of all US banknotes have been in circulation outside the country since 1990.

What would happen if someday the rest of the world decides to reject the U.S. dollar and that process suddenly reversed and a tsunami of U.S. dollars come flooding back to this country? It is frightening to think about. Just take a moment and think of the worst superstorm that you can possibly imagine, and then replace every drop of rain with a dollar bill.  The giant currency superstorm that will eventually hit this nation will be far worse than that.

The key [to preventing the above from happening] is to get the rest of the world to continue to have confidence in the U.S. dollar…[but,] unfortunately, there are many signs that the rest of the world is, in fact, accelerating their move away from the U.S. dollar…

Will this movement soon become a stampede away from the U.S. dollar? That is a very important question but you don’t hear anything about this in the U.S. media and our politicians are not talking about this at all.

Meanwhile, our “leaders” seem to be doing everything that they can to destroy confidence in the U.S. dollar.  The Federal Reserve is printing money like there is no tomorrow, and the federal government continues to run up trillion dollar deficits year after year. They do not seem to understand that they are systematically destroying the U.S. financial system.

Other world leaders get it.  For example, Russian President Vladimir Putin once said(3) the following…

“Unreasonable expansion of the budget deficit, accumulation of the national debt – are as destructive as an adventurous stock market game.
During the time of the Soviet Union the role of the state in economy was made absolute, which eventually lead to the total non-competitiveness of the economy. That lesson cost us very dearly. I am sure no one would want history to repeat itself.”

Wow! Why can’t most of our politicians see how destructive debt is? What the federal government continues to do is absolutely insane….but utter disaster has not struck yet, and most Americans are not really that concerned about the debt – so things just keep rolling along.

Our national debt of $21T is nothing when compared to the future liabilities that our federal government is facing.  Just check out what a recent article in the Wall Street Journal had to say about all this…

The actual liabilities of the federal government—including Social Security, Medicare, and federal employees’ future retirement benefits—already exceed $86.8 trillion, or 550% of GDP. For the year ending Dec. 31, 2011, the annual accrued expense of Medicare and Social Security was $7 trillion. Nothing like that figure is used in calculating the deficit. In reality, the reported budget deficit is less than one-fifth of the more accurate figure.

Other economists paint an even gloomier picture.  According to economist Niall Ferguson, the U.S. government is facing future unfunded liabilities of 238 trillion dollars.

Where are we going to get all that money? Well, why don’t we just print more money than ever before so that the U.S. government can borrow and spend more money than ever before? Don’t laugh.  That is actually what some of the top economists in the country are actually recommending.

The most famous economic journalist in the entire country, Paul Krugman of the New York Times, is boldly proclaiming that the solution to all of our problems is to print, borrow and spend a lot more money.  He insists that there is no reason to fear that the giant mountain of debt that we are accumulating will someday collapse the system…

For we have our own currency — and almost all of our debt, both private and public, is denominated in dollars so our government, unlike the Greek government, literally can’t run out of money. After all, it can print the stuff so there’s almost no risk that America will default on its debt — I’d say no risk at all if it weren’t for the possibility that Republicans would once again try to hold the nation hostage over the debt ceiling.

But if the U.S. government prints money to pay its bills, won’t that lead to inflation? No, not if the economy is still depressed.

Now, it’s true that investors might start to expect higher inflation some years down the road. They might also push down the value of the dollar. Both of these things, however, would actually help rather than hurt the U.S. economy right now: expected inflation would discourage corporations and families from sitting on cash, while a weaker dollar would make our exports more competitive.

Of course what he is prescribing is complete and utter madness. At some point this con game is going to collapse and the rest of the world is going to say a big, fat, resounding “NO” to the U.S. dollar. Why should they continue to use a currency that is becoming extremely unstable and that is constantly being manipulated?

When the rest of the world rejects the U.S. dollar, the value of the dollar will drop like a rock because there will be far less global demand for it. In addition, if the rest of the world is not using the U.S. dollar for trade any longer, other nations will cease to soak up our excess currency and huge mountains of our currency that are floating around out there will start flooding back to our shores. At that point we will be looking at inflation unlike anything we have ever seen before.  The era of cheap imports will be over and we will pay far more for everything from oil to the foreign-made plastic trinkets that we buy at Wal-Mart.

Most Americans don’t even know what a “reserve currency” is, but when the U.S. dollar loses reserve currency status it is going to unleash a nightmare that most economists cannot even imagine so enjoy this holiday season while you can.  There are still lots and lots of cheap imports filling the shelves of our stores.

Conclusion

By recklessly printing, borrowing and spending money, our authorities are absolutely shredding confidence in the U.S. dollar.  The rest of the world is watching this nonsense, and at some point they are going to give up on the U.S. dollar and throw their hands up in the air.  When that happens, it is going to be absolutely catastrophic for the U.S. economy.

Once the coming giant currency superstorm strikes we will dearly wish for the good old days of 2012. Yes, the U.S. dollar is alive and [k]icking for now but at the pace that our authorities are abusing it, I would not say that things are looking good for a long and healthy lifespan.

  1. http://theeconomiccollapseblog.com/archives/the-giant-currency-superstorm-that-is-coming-to-the-shores-of-america-when-the-dollar-dies
  2. http://www.voxeu.org/article/dollar-s-international-roles
  3. http://english.pravda.ru/opinion/columnists/19-11-2012/122849-obama_soviet_mistake-0/
Editor’s Note: The above post may have been edited ([ ]), abridged (…), and reformatted (including the title, some sub-titles and bold/italics emphases) for the sake of clarity and brevity to ensure a fast and easy read. The article’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article.

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42. Major Inflation is Inescapable and the Forerunner of an Unavoidable Depression – Here’s Why

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Whether our current economic crisis will end with massive inflation or in a deflationary spiral (ultimately, either one results in a Depression) is more than an academic one. It is the single most important variable for near and intermediate term investing success. It is also important in regard to taking actions which can prepare and protect you and your family. [Here is my assessment of what the future outcome will likely be and why.] Words: 144

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45. Any Way You Look At It Very High Inflation Is Inevitable – Here’s Why

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47. Major Changes in Inflation, Interest Rates, ‘Taxes’ and U.S. Dollar Coming

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48. Creating More Inflation is Now the Official Policy of the Fed

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The Fed is completely convinced that without an inexorably rising rate of inflation there won’t be enough money made available to finance our rapidly increasing national debt. [As such, they have just] disclosed that they now have an inflation goal of at least two percent . As a result, we are stuck with a perpetually decreasing standard of living, a middle class that is on the endangered species list and provided the holders of U.S. dollars a target rate for its destruction…[Indeed,] Bernanke’s actions are so destructive to savers that I’m sure if he were a broker, he would be telling his clients to buy more gold.

49. True Money Supply Is Already Hyperinflationary! What’s Next?

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50. How Likely Will Hyperinflation Occur in the U.S.?

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51. A Hyperinflationary Great Depression Is Coming to America by 2014! Here’s Why

The U.S. economic and systemic-solvency crises of the last four years only have been precursors to the coming Great Collapse: a hyperinflationary great depression. Outside timing on the hyperinflation remains 2014, but there is strong risk of a currency catastrophe beginning to unfold in the months ahead…moving into a full blown hyperinflation [in a few] months to a year… depending on the developing global view of the dollar and reactions of the U.S. government and the Federal Reserve. [Let me go into more detail.] Words: 2726

52. Hyperinflation to Occur in U.S. as Early as 2013! Here’s Why

In our estimation, the most likely time frame for a full-fledged outbreak of hyperinflation in America is between the years 2013 and 2015 [based on 12 warning signs that are on the horizon.] Americans who wait until 2013 to prepare, will most likely see the majority of their purchasing power wiped out. It is essential that all Americans begin preparing for hyperinflation immediately. Words: 2065

53. Coming Inflation to Make U.S. Dollar Not Only Worth Less – But Worthless!

The Federal Reserve is now trying to figure out ways to boost inflation expectations… so that Americans are encouraged to spend more before their money is worth less. Unfortunately, not only will their money soon be worth less, it will literally become worthless! Words: 904

54. Washington Politicians Will Cause Rampant Inflation With Their In-Action and Mis-Action!

The National Inflation Association (NIA) believes it is very unlikely that our representatives in Washington will have the political backbone and courage to implement any of the National Commission on Fiscal Responsibility and Reform’s proposed cuts in domestic and defense expenditures and increases in tax revenues. [Instead, as the NIA sees it,] the U.S. is on a path towards exploding budget deficits in the years ahead that could cause an outbreak of hyperinflation by the end of calendar year 2015. Words: 887

55. Remedies to Fiscal Gap Guarantee Hyperinflation!

Boston University economist, Prof. Kotlikoff, maintains that the U.S. cannot end its fiscal crisis by doubling taxes, as the International Monetary Fund suggests, or further stimulus spending [as Bernanke is doing] because it will simply increase the debt. [Instead he has some radical proposals of his own.] Words: 704

56. What’s Coming: A Hyperinflationary or A Deflationary Depression?

While I believe that the US is heading towards a Weimar style hyperinflationary depression there are several developments that point to the possibility of another deflationary depression, similar to the 1930’s. Words: 858

57. Finally: A Clear Understanding of Hyperinflation, Money Demand & the “Crack-Up Boom”

Some people consider a rise in overall prices of 10 percent per month (which implies an annual rate of price increases of around 214 percent) as hyperinflation; others indentify hyperinflation as a monthly price rise of at least 20 percent (which implies an annual increase in prices of nearly 792 percent). Words: 1353